Its August-to-August revenues were up nearly 50%. Granted this rise was off a relatively small base (although not that small; Hyundai sales are now about the same as Chrysler’s). But still, for a company that’s been selling in the States for over a decade, it was a whopping jump.
Why are consumers suddenly buying Hyundai’s? Tighter budgets certainly make low-price sedans more attractive than SUVs. But as I’m happy to see the Times reporting, that’s not the whole story. The big reason is better value, as value should be evaluated: 'benefits - price'. All too frequently today, brand players and pundits confuse "lowest price" with "best value". The assumption in this line of thinking is that consumers essentially incorporate no other criteria in their selection decision. Hyundai understands the distinction well.
Consumers and car mags think the product is improving. And Hyundai management was aggressive with improving the consumers total experience. For example, they were first to let consumers who lost their job return a car within 12 months of purchase, heretofore an unheard-of warrantee.Hyundai is a classic market-entry success story. A renegade entrant comes in with an offering below the old market minimum, then gradually learns new ways to provide benefits and better value in more compelling ways than other low price competitors.
What I like, though, is that Hyundai provides the textbook example for the case I’ve been making to manufacturers ever since the financial crisis took hold. Yes, you have to get your costs under control. But do it sensibly and with care not to negate long-term brand, distribution, and marketplace advantage. Indeed, this may be the best of all possible times to create new advantage.
For established competitors in 2009, that meant investing in differentiated customer experiences. Hyundai did. I haven’t seen any figures on lost-job car returns, but my hunch is they’re not high. People find they like the car. One man, the Times reports, says, “I used to drive Cadillacs all the time. I don’t need to drive a heavy car like that anymore. No disrespect to G.M. or anybody, but my next car will be a Hyundai, too.”